26 January 2023 | Other

U.S. gas is getting cheaper on warmer weather outlook and Freeport downtime

U.S. natural gas futures fell 6%, hitting a 19-month low, according to data released Wednesday. This is due to the meteorological forecast of less cold weather in the region and, therefore, a drop in gas demand expected over the next week. Another reason for lower prices is the growing market belief that Freeport LNG's export plant won't resume operations in the next few weeks or even months. 

Earlier, EBW Analytics reported better weather conditions in Texas and the Midwest. So, freezing of oil and gas wells that could lead to lower mining output, is considered to be unlikely. This data mitigates the risk of more severe weather in February. 

Analysts estimated that Freeport LNG's plant may not resume operations until February or March 2023. Meanwhile, the market expects a rise in gas prices, along with higher demand for the natural resource after a restart of the plant. 

But experts at Tudor Pickering Holt & Co. believe that the gas market will show an oversupply. Prices are likely to fall in order to push companies into reducing natural gas production and relieving storage facilities of excess reserves.

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